Insight gained into world dairy markets

More than 500 nutritionists, researchers, and farmers gathered in Ft. Wayne, Ind. this week for the twenty-third Tri-State Dairy Nutrition Conference. There was an excellent slate of speakers discussing new developments in dairy cow and calf nutrition and management.

Kicking off the event was Christopher Sommer, from the International Farm Comparison Network (IFCN). Sommer and his colleagues in Schleswig-Holstein, Germany have teamed with researchers and farm business analysis-type people in 95 countries to compare milking systems, milk prices and costs of production since 2000.

What have they found?

Around the globe, there are 122 million dairy farms caring for more than 363 million cows and buffalos. While that averages only three animals per farm, some have fewer, and some, as we well know, have many more. Each of these animals produces an average of 4,620 pounds of energy corrected milk each year (a good goat here!)

Herd sizes

Just as herd sizes vary dramatically from country to country, so does the cost of producing milk. The IFCN develops two typical farm models for each country involved and uses these models to consistently compare costs across countries. Based on their comparison, it cost only $1.82 to produce a cwt. of milk in Cameroon, where milk production is a by-product of beef produced on grass. At the opposite extreme, an average-sized Japanese farm was the highest cost producer at more than $58/cwt.

Interestingly, they have identified three regions where the average-sized farms are the lowest-cost farms: 1) Argentina, Peru, and Uruguay, 2) Central and Eastern Africa, and 3) Central and Eastern Europe. A few other countries scattered through Asia also have low costs.

Regardless of location, from 2000 to 2012, they found that the cost of production increased in all of the countries that they analyzed. In some countries such as Poland, China, and New Zealand, costs doubled or tripled within three to six years.

High cost

China is a high-cost country, with costs estimated to be 50% higher than that of the United States (US was around $18 per cwt). This higher cost in China is attributed to high levels of purchased feed combined with the highest increase in salaries and their currency appreciating 24%. The average price for producing milk around the world was $20.91 per cwt.

Analyzing data

Just as there is value in analyzing and benchmarking an individual dairy farm’s financial and production data with similar farms each year, there is value in benchmarking our country’s financial and production data with the rest of the world.

How do we stack up? Are we competitive in world markets? Who are our competitors? How is the whole picture changing over time? How is the world changing, and how do we adapt and thrive in the midst of change?